My Top 10 Takeaways From “The Intelligent Investor” |Benjamin Graham

Definitive Book On Value Investing

1. “An investment operation is one which, upon thorough analysis, promises safety of principal and an adequate return. Operations not meeting these requirements are speculative.”

2. “invest only if you would be comfortable owning a stock even if you had no way of knowing its daily share price.”

3. “Obvious prospects for physical growth in a business do not translate into obvious profits for investors.”

4. “The intelligent investor realizes that stocks become more risky, not less, as their prices rise — and less risky, not more, as their prices fall. The intelligent investor dreads a bull market, since it makes stocks more costly to buy. And conversely (so long as you keep enough cash on hand to meet your spending needs), you should welcome a bear market, since it puts stocks back on sale.”

5. He looks for what he calls “franchise” companies with strong consumer brands, easily understandable businesses, robust financial health, and near-monopolies in their markets, like H & R Block, Gillette, and the Washington Post Co. Buffett likes to snap up a stock when a scandal, big loss, or other bad news passes over it like a storm cloud

6. “The psychologists Daniel Kahnerman and Amos Tversky have shown when humans estimate the likelihood or frequency of an event, we make that judgment based not on how often the event has actually occurred, but on how vivid the past examples are.”

7. “The market is a pendulum that forever swings between unsustainable optimism (which makes stocks too expensive) and unjustified pessimism (which makes them too cheap). The Intelligent Investor is a realist who sells to optimists and buys from pessimists.”

8. “A cynic once told G. K. Chesterton, the British novelist and essayist, “Blessed is he who expecteth nothing, for he shall not be disappointed.” Chesterton’s rejoinder? “Blessed is he who expecteth nothing, for he shall enjoy everything.”

9. “You will be much more in control, if you realize how much you are not in control.”

10. “The stock investor is neither right or wrong because others agreed or disagreed with him; he is right because his facts and analysis are right.”

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